China’s three largest internet companies reported divergent earnings for the second quarter of 2026, reflecting uneven recovery paths across the sector.
Tencent Holdings delivered its fourth consecutive quarter of meeting or exceeding analyst expectations, posting earnings per share of HKD 7.43 against a consensus forecast of HKD 7.32, a 1.5% beat. Revenue reached HKD 204.8 billion, topping estimates by 1.2%. The company’s trailing price-to-earnings ratio stood at 14.8 times, supported by a gross margin of 56.7% and a net margin of 29.9%. Long-term metrics showed 12% revenue growth and 14.5% EPS growth over the last 12 months, with free cash flow yield at 5.2%. Shares rose 1.7% to HKD 454.80 in late trading on August 18.
Alibaba reported its fourth straight quarterly earnings miss, with June-quarter EPS falling 17.3% short of consensus. Revenue growth remained positive at 2.7% year-over-year, but net income declined over the past three fiscal years, from HKD 138.8 billion to HKD 120.4 billion. The company’s trailing P/E was 18.7 times, while gross margin stood at 39.8% and net margin compressed to 10.1%. Free cash flow yield turned negative at -2.5%.
Baidu posted a 36% earnings miss in Q2 2026, marking the end of a three-quarter streak of beats. Revenue was broadly flat over the past three years, hovering around HKD 143–148 billion. The company reported a net loss of HKD 5.3 billion in the last 12 months, with gross margin eroding from 51.7% to 40.9% and net margin at -2.9%. Forward P/E was 14.9 times, while consensus EPS estimates were cut by 18.6% over the prior 60 days.
The contrasting results underscore the uneven recovery in China’s tech sector, with Tencent maintaining steady profitability and growth, while Alibaba and Baidu face margin pressure and earnings volatility.
